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2020 (3) TMI 1455 - AT - Income TaxPenalty u/s 271FA - assessee has not furnished Annual Information Return ( AIR ) as required u/s 285BA(1) read with Rule 114E of Income tax Rules for the financial year 2013-14 - As per assessee there was reasonable cause for the assessee in not filing the AIR as the co-operative banks were specifically included with effect from 01-04-2016 and hence there was a view that the co-operative banks are not required to furnish AIR information - HELD THAT - We notice that the original provisions of Rule 114E of Income tax Rules did not include co-operative bank and it was inserted only in the amended provisions of Rule 114E, which came into effect from 1.4.2016. Accordingly, in our view, there is merit in the submission of the ld A.R that there existed an ambiguity as to whether the co- operative banks are required to comply with the provisions of Rule 114E of the Act, meaning thereby, the bonafide belief of the assessee shall constitute reasonable cause in terms of sec.273B of the Act for the failure in furnishing the AIR for the year under consideration. In this view of the matter, the impugned penalty is liable to be deleted. Accordingly we set aside the order passed by Ld CIT(A) and direct the AO to delete the impugned penalty levied u/s 271FA of the Act for the year under consideration.Appeal of the assessee is allowed.
Issues:
Challenge to penalty under section 271FA of the Act for non-filing of Annual Information Return (AIR) electronically as required by Rule 114E of Income tax Rules for the financial year 2013-14. Analysis: The appeal challenged the penalty imposed under section 271FA of the Act for not filing the AIR electronically as mandated by Rule 114E of Income tax Rules for the financial year 2013-14. The Director of Income tax (Intelligence & Criminal Investigation) noticed the non-filing of AIR by the assessee and issued a notice under section 285BA(5) of the Act. The assessee manually furnished the AIR, which was required to be filed electronically as per the provisions. The Director did not recognize the manual return, leading to penalty proceedings under section 271FA. The penalty of Rs.3,97,100 was levied, calculated at Rs.100 per day from the due date until the notice's expiry date. The assessee's appeal before the Ld CIT(A) was dismissed, prompting the current appeal. The Ld A.R contended that the amendment to Rule 114E, specifically including "co-operative banks" with effect from 01-04-2016, created ambiguity. The pre-amendment provisions did not cover co-operative banks, leading to the assessee's belief that they were not required to furnish AIR information. This ambiguity, according to the Ld A.R, constituted a reasonable cause under sec.273B of the Act, warranting the penalty's deletion. The Ld D.R argued that the amendment was clarificatory and that all assessees fell under sec.285BA(1) of the Act, dismissing the ambiguity claim. After hearing both sides and examining the record, the Tribunal noted that the original Rule 114E did not include co-operative banks, with the amendment effective from 1.4.2016. Acknowledging the ambiguity regarding co-operative banks' compliance, the Tribunal found merit in the assessee's bonafide belief constituting a reasonable cause under sec.273B of the Act. Consequently, the Tribunal set aside the Ld CIT(A)'s order and directed the AO to delete the penalty under section 271FA for the relevant year. In conclusion, the Tribunal allowed the appeal of the assessee, ruling in favor of deleting the penalty under section 271FA of the Act for non-filing of the AIR electronically as required by Rule 114E of Income tax Rules for the financial year 2013-14.
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